Powerfleet, Inc. 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis of the consolidated financial condition and results of operations of Powerfleet, Inc. and its subsidiaries (“Powerfleet,” the “Company,” “we,” “our” or “us”) should be read in conjunction with the condensed consolidated financial statements and related notes thereto appearing in Part I, Item 1 of this report and Part II, Item 8 of our Annual Report on Form 10-K for the fiscal year ended March 31, 2025 (our “Form 10-K”). Many of the amounts and percentages in this section have been rounded for convenience of presentation, but actual recorded amounts have been used in computations. Accordingly, some information may appear not to be computed accurately. Cautionary Note Regarding Forward-Looking Statements This report contains “forward-looking statements” (within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), which may include information concerning our beliefs, plans, objectives, goals, expectations, strategies, anticipations, assumptions, estimates, intentions, future events, future revenues or performance, capital expenditures and other information that is not historical information. Forward-looking statements involve known and unknown risks, uncertainties and other factors, which may be beyond our control, and which may cause our actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. When used in this report, the words “seek,” “estimate,” “expect,” “anticipate,” “project,” “plan,” “contemplate,” “continue,” “intend,” “believe” and variations of such words or similar expressions are intended to identify forward-looking statements. All forward-looking statements are based upon our current expectations and various assumptions. We believe there is a reasonable basis for its expectations and beliefs, but there can be no assurance that we will realize our expectations or that our beliefs will prove to be correct. There are risks and uncertainties that could cause our actual results to differ materially from the forward-looking statements contained in this report. Important factors that could cause our actual results to differ materially from those expressed as forward-looking statements herein include, but are not limited, to: the possibility that the anticipated cost savings, synergies and operational benefits from the MiX Combination and FC Acquisition may not be fully realized or may take longer than expected, and that the combined business may not perform as expected; global economic conditions as well as exposure to foreign exchange, political, trade and geographic risks, including tariffs and the conflict in the Middle East; disruptions or limitations in our supply chain, particularly with respect to key components; operational risks, including the successful implementation of internal business and information technology (“IT”) systems; technological changes or product developments that may be more complex, costly, or less effective than expected; cybersecurity risks and our ability to protect our IT systems from breaches; competitive pressures from a broad range of local, regional, national and other providers of wireless solutions; our ability to effectively navigate the international political, economic and geographic landscape; risks related to the protection and enforcement of our intellectual property rights; changes in applicable laws and regulations or changes in generally accepted accounting policies, rules and practices; and other risks and uncertainties disclosed from time to time in our filings with the Securities and Exchange Commission (the “SEC”), including our Form 10-K. There may be other factors of which we are currently unaware or which we currently deem immaterial that may cause our actual results to differ materially from the forward-looking statements. All forward-looking statements attributable to us or persons acting on our behalf apply only as of the date they are made and are expressly qualified in their entirety by the cautionary statements included in this report. Except as may be required by law, we undertake no obligation to publicly update or revise any forward-looking statement to reflect events or circumstances occurring after the date they were made or to reflect the occurrence of unanticipated events, or otherwise. Overview Powerfleet is a global provider of Artificial Intelligence-of-Things solutions providing valuable business intelligence for managing high-value enterprise assets that improve operational efficiencies. We are headquartered in Woodcliff Lake, New Jersey, with offices located around the globe. On April 2, 2024, we acquired MiX Telematics, and on October 1, 2024, we acquired Fleet Complete. Since the closing of these acquisitions, we have made significant progress in integrating the businesses into our operations, with alignment of core functions and early realization of operational synergies. 36 Recent Developments Fluctuations in currency values, continued supply chain disruptions, changes in tariff policies and import and export restrictions, and the conflict in the Middle East have resulted in significant economic disruption and adversely impacted the broader global economy, including our customers and suppliers. Given the dynamic and uncertain nature of the current macroeconomic environment, we cannot reasonably estimate the impact of such developments on our financial condition, results of operations or cash flows into the foreseeable future. While we do not currently believe that inflation and recently pronounced tariffs have had a material impact on our condensed consolidated financial statements, the ultimate extent of the effects of these developments remains highly uncertain, and such effects could exist for an extended period of time. Risks to Our Business We expect that many customers who utilize our solutions will do so as part of a large-scale deployment of these solutions across multiple or all divisions of their organizations. A customer’s decision to deploy our solutions throughout its organization will involve a significant commitment of its resources. Accordingly, initial implementations may precede any decision to deploy our solutions enterprise-wide. Throughout this sales cycle, we may spend considerable time and expense educating and providing information to prospective customers about the benefits of our solutions, and there can be no assurance that our solutions will be deployed on a wider scale by the customer. The timing of the deployment of our solutions may vary widely and will depend on the specific deployment plan of each customer, the complexity of the customer’s organization and the difficulty of such deployment. Customers with substantial or complex organizations may deploy our solutions in large increments on a periodic basis. Accordingly, we may receive purchase orders for significant dollar amounts on an irregular and unpredictable basis. Long sales cycles, as well as our expectation that customers will tend to place large orders sporadically with short lead times, may cause our revenue and results of operations to vary significantly and unexpectedly from quarter to quarter. These variations could materially and adversely affect the market price of our common stock. Our ability to increase our revenues and generate net income will depend on a number of factors, including, for example, our ability to: • increase sales of products and services to our existing customers; • convert our initial programs into larger or enterprise-wide purchases by our customers; • increase market acceptance and penetration of our products; and • develop and commercialize new products and technologies. Additional risks and uncertainties to which we are subject are described under the heading “Risk Factors” in our Form 10-K. Critical Accounting Policies For the three- and nine-month periods ended December 31, 2025, there were no significant changes to our critical accounting policies as identified in our Form 10-K. 37 Results of Operations The following table sets forth, for the periods indicated, certain operating information expressed as a percentage of revenue: Three Months Ended December 31, Nine Months Ended December 31, 2024 2025 2024 2025 Revenues: Products 23.2 % 19.7 % 24.6 % 19.0 % Services 76.8 % 80.3 % 75.4 % 81.0 % Total revenues 100.0 % 100.0 % 100.0 % 100.0 % Cost of revenues: Cost of products 16.1 % 13.5 % 16.9 % 13.3 % Cost of services 28.7 % 31.3 % 29.1 % 31.5 % Total cost of revenues 44.8 % 44.8 % 46.0 % 44.8 % Gross profit 55.2 % 55.2 % 54.0 % 55.2 % Operating expenses: Selling, general and administrative expenses 52.1 % 45.6 % 57.0 % 48.5 % Research and development expenses 4.3 % 4.0 % 4.3 % 4.1 % Total operating expenses 56.4 % 49.6 % 61.3 % 52.6 % (Loss) profit from operations (1.2) % 5.6 % (7.3) % 2.6 % Interest income 0.3 % 0.1 % 0.3 % 0.2 % Interest expense, net (7.5) % (6.0) % (5.7) % (6.3) % Other (expense) income, net (1.9) % — % (0.4) % (0.5) % Net loss before income taxes (10.2) % (0.3) % (13.0) % (4.0) % Income tax expense (3.3) % (2.6) % (1.9) % (1.4) % Net loss before non-controlling interest (13.5) % (3.0) % (14.9) % (5.4) % Non-controlling interest — % — % — % — % Net loss (13.5) % (3.0) % (14.9) % (5.4) % Preferred stock dividend — % — % (0.0)% — % Net loss attributable to common stockholders (13.5) % (3.0) % (14.9) % (5.4) % 38 Three Months Ended December 31, 2025 Compared to Three Months Ended December 31, 2024 REVENUES. Revenues increased by $7.1 million, or 6.6%, to $113.5 million in the three months ended December 31, 2025, from $106.4 million in the same period in 2024. Revenues from products decreased by $2.3 million, or 9.3%, to $22.4 million in the three months ended December 31, 2025, from $24.7 million in the same period in 2024. The decrease in product revenues was primarily due to the increased mix of bundled customer contracts across the Company for the three months ended December 31, 2025 that reduced standalone product revenues. Revenues from services increased by $9.3 million, or 11.4%, to $91.1 million in the three months ended December 31, 2025, from $81.7 million in the same period in 2024. The increase in services revenue was driven by increased adoption of the Company’s AI-powered SaaS solutions and strong global demand across both direct and indirect channels, centered on differentiated safety and compliance solutions. COST OF REVENUES. Cost of revenues increased by $3.2 million, or 6.6%, to $50.8 million in the three months ended December 31, 2025, from $47.6 million for the same period in 2024. Gross profit was $62.7 million in the three months ended December 31, 2025, compared to $58.8 million for the same period in 2024. As a percentage of revenues, gross profit was 55.2% in the three months ended December 31, 2025 consistent with 55.2% in the same period in 2024. Cost of products decreased by $1.8 million, or 10.6%, to $15.3 million in the three months ended December 31, 2025, from $17.1 million in the same period in 2024, primarily due to increased mix of bundled customer contracts across the Company that reduced standalone product sales. Gross profit for products was $7.1 million in the three months ended December 31, 2025, compared to $7.6 million in the same period in 2024. As a percentage of product revenues, gross profit increased to 31.6% in the three months ended December 31, 2025 from 30.6% in the same period in 2024, reflecting the improved sales mix. Cost of services increased by $5.0 million, or 16.3%, to $35.5 million in the three months ended December 31, 2025, from $30.5 million in the same period in 2024. Gross profit for services was $55.6 million in the three months ended December 31, 2025, compared to $51.2 million in the same period in 2024. As a percentage of services revenues, gross profit was 61.0% in the three months ended December 31, 2025, compared to 62.7% in the same period in 2024 due to an increase in in-vehicle device depreciation and amortization (including the amortization of acquisition intangibles for the MiX Telematics and Fleet Complete transactions). SELLING, GENERAL AND ADMINISTRATIVE (“SG&A”) EXPENSES. SG&A expenses decreased by $3.6 million, or (6.6)%, to $51.8 million in the three months ended December 31, 2025, compared to $55.4 million in the same period in 2024. SG&A expenses included $0.3 million in acquisition-related expenses, $1.3 million in integration-related expenses and $0.8 million in restructuring-related costs for the three months ended December 31, 2025, compared to $5.3 million in acquisition-related expenses, $0.5 million in integration-related expenses and $0.8 million in restructuring-related costs in the same period in 2024 . As a percentage of revenues, SG&A expenses decreased to 45.6% in the three months ended December 31, 2025, compared to 52.1% for the same period in 2024. As a percentage of revenues, SG&A expenses, excluding $2.4 million in acquisition-related expenses, integration-related expenses and restructuring-related costs, decreased to 43.5% in the three months ended December 31, 2025, from 45.8% in the same period in 2024. The decrease is primarily due to cost savings from the synergies realized as a result of the MiX Combination and FC Acquisition. RESEARCH AND DEVELOPMENT (“R&D”) EXPENSES. R&D expenses remained consistent at $4.6 million in the three months ended December 31, 2025 and $4.6 million in the same period in 2024. As a percentage of revenues, R&D expenses were 4.0% in the three months ended December 31, 2025, compared to 4.3% in the same period in 2024. NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS. Net loss attributable to common stockholders was $3.4 million, or $(0.03) per basic and diluted share, for the three months ended December 31, 2025, as compared to net loss of $14.3 million, or $(0.11) per basic and diluted share, for the same period in 2024. The net loss was primarily the result of $1.1 million foreign currency losses, $1.3 million in integration-related costs, and $0.8 million in restructuring-related costs. 39 Nine Months Ended December 31, 2025 Compared to Nine Months Ended December 31, 2024 REVENUES. Revenues increased by $70.4 million, or 27.2%, to $329.3 million in the nine months ended December 31, 2025, from $258.9 million in the same period in 2024. Product revenues decreased by $1.3 million, or 2.0%, to $62.4 million for the nine months ended December 31, 2025, from $63.7 million in the prior-year period. The Fleet Complete acquisition added an incremental $3.0 million of product revenues for the nine months ended December 31, 2025. Excluding the acquisition contribution, the decline in product revenues reflects the continued transition toward bundled service offerings and the impact of higher tariffs in the United States. Services revenue increased by $71.7 million, or 36.7%, to $266.9 million in the nine months ended December 31, 2025, compared to $195.2 million in the same period in 2024. The Fleet Complete acquisition added an incremental $53.6 million of service revenues for the nine months ended December 31, 2025. The increase in services revenues for the combined business was driven primarily by underlying organic growth initiatives, partially offset by proactive actions to de-emphasize certain non-core lines of business. COST OF REVENUES. Cost of revenues increased by $28.4 million, or 23.9%, to $147.5 million in the nine months ended December 31, 2025, from $119.1 million for the same period in 2024. Gross profit was $181.8 million in the nine months ended December 31, 2025, compared to $139.8 million for the same period in 2024. As a percentage of revenues, gross profit increased to 55.2% in the nine months ended December 31, 2025, from 54.0% in the same period in 2024. This was primarily driven by high margin services revenue comprising 81.0% of total revenues in the nine months ended December 31, 2025, compared to 75.4% for the same period in 2024. Cost of products increased by $0.1 million, or 0.1%, to $43.9 million in the nine months ended December 31, 2025, from $43.8 million in the same period in 2024. Gross profit for products was $18.6 million in the nine months ended December 31, 2025, compared to $19.9 million in the same period in 2024. As a percentage of product revenues, gross profit decreased to 29.7% in the nine months ended December 31, 2025, from 31.2% in the same period in 2024. Gross profit as a percentage of product revenues was negatively impacted by tariffs in the United States, which increased underlying costs. Cost of services increased by $28.4 million, or 37.7%, to $103.7 million in the nine months ended December 31, 2025, from $75.3 million in the same period in 2024. The Fleet Complete acquisition added an incremental $14.8 million of cost of services for the nine months ended December 31, 2025. The amortization of acquisition intangibles for the MiX Telematics and Fleet Complete transactions contributed an incremental $7.8 million in the aggregate to cost of services for the nine months ended December 31, 2025. Gross profit for services was $163.2 million in the nine months ended December 31, 2025, compared to $119.9 million in the same period in 2024. As a percentage of services revenues, gross profit remained relatively consistent at 61.2% in the nine months ended December 31, 2025, compared to 61.4% in the same period in 2024. SG&A EXPENSES. SG&A expenses increased by $12.1 million, or 8.2%, to $159.6 million in the nine months ended December 31, 2025, compared to $147.5 million in the same period in 2024. The increase was driven primarily by the acquisition of Fleet Complete, which added an incremental $29.4 million of SG&A expenses for the nine months ended December 31, 2025, as well as higher investments in go-to-market initiatives. These increases were partially offset by a $19.4 million decrease in acquisition-related expenses for the nine-month period ended December 31, 2025. As a percentage of revenues, SG&A expenses decreased to 48.5% for the nine months ended December 31, 2025, compared to 57.0% in the same period in 2024, reflecting improved operating leverage following the Fleet Complete acquisition. R&D EXPENSES. R&D expenses increased by $2.5 million, or 22.1%, to $13.6 million in the nine months ended December 31, 2025, compared to $11.2 million in the same period in 2024. The Fleet Complete acquisition added an incremental $2.5 million of R&D expenses for the nine months ended December 31, 2025. As a percentage of revenues, R&D expenses were 4.1% in the nine months ended December 31, 2025, compared to 4.3% in the same period in 2024. NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS. Net loss attributable to common stockholders was $17.9 million, or $(0.13) per basic and diluted share, for the nine months ended December 31, 2025, as compared to net loss of $38.6 million, or $(0.33) per basic and diluted share, for the same period in 2024. The $20.7 million decrease in net loss was driven primarily by a $19.4 million decrease in acquisition-related expenses. 40 Non-GAAP Financial Information We use certain measures to assess the financial performance of our business. Certain of these measures are termed “non-GAAP measures” because they exclude amounts that are included in, or include amounts that are excluded from, the most directly comparable measure calculated and presented in accordance with GAAP, or are calculated using financial measures that are not calculated in accordance with GAAP. These non-GAAP measures include adjusted EBITDA. An explanation of the relevance of the non-GAAP measure, a reconciliation of the non-GAAP measure to the most directly comparable measure calculated and presented in accordance with GAAP and a discussion of its limitations is set out below. We do not regard this non-GAAP measure as a substitute for, or superior to, the equivalent measure calculated and presented in accordance with GAAP or that calculated using financial measure that is calculated in accordance with GAAP. Adjusted EBITDA We define adjusted EBITDA as net loss attributable to common stockholders before non-controlling interest, preferred stock dividend, interest expense (net), other income (net), income tax expense, depreciation and amortization, stock-based compensation, foreign currency losses, restructuring-related expenses, derivative mark-to market adjustment, acquisition-related expenses and integration-related expenses. Upon further review of our non-GAAP financial reporting, we refined our definition of adjusted EBITDA by removing recognition of pre-October 1, 2024 contract assets (Fleet Complete). Comparative information has been adjusted to conform with the updated presentation. We have included adjusted EBITDA in this Quarterly Report on Form 10-Q because it is a key measure that our management and board of directors use to understand and evaluate our business and ongoing operating performance, to prepare and approve our annual budget, and to develop short and long-term operational plans. We believe adjusted EBITDA eliminates the uneven effect of considerable amounts of non-cash depreciation and amortization, stock-based compensation and other items that might otherwise make comparisons of our ongoing business with prior periods more difficult and obscure trends in ongoing operations. Accordingly, we believe that adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results. Because our method for calculating adjusted EBITDA may differ from other companies’ methods, the non-GAAP measures may not be comparable to similarly titled measures reported by other companies. A reconciliation of net loss attributable to common stockholders (the most directly comparable financial measure presented in accordance with GAAP) to adjusted EBITDA for the periods shown is presented below. 41 Reconciliation of Net Loss Attributable to Common Stockholders to Adjusted EBITDA Three Months Ended December 31, Nine Months Ended December 31, 2024 2025 (1) 2024 2025 (1) (In thousands) Net loss attributable to common stockholders $ (14,349) $ (3,364) $ (38,573) $ (17,886) Non-controlling interest (1) — 17 — Preferred stock dividend — — 25 — Interest expense, net 7,583 6,733 13,844 20,038 Other income, net — (146) — (175) Income tax expense 3,513 2,991 4,821 4,624 Depreciation and amortization 13,643 15,867 33,042 47,691 Stock-based compensation 1,138 1,491 8,438 5,938 Foreign currency losses 543 1,059 1,288 3,782 Restructuring-related expenses 841 763 3,108 4,342 Derivative mark-to-market adjustment 1,722 (1,268) (475) (2,054) Acquisition-related expenses 5,301 289 20,872 1,476 Integration-related expenses 520 1,276 2,259 2,829 Adjusted EBITDA $ 20,454 $ 25,691 $ 48,666 $ 70,605 (1) Following the closing of the FC Acquisition, we included an EBITDA adjustment related to the recognition of pre-October 1, 2024, contract assets. This adjustment represented recoveries, through customer billings, of the contract asset recognized at acquisition for hardware delivered by Fleet Complete prior to October 1, 2024. This adjustment was intended to give investors a clearer view of underlying operating performance and cash generation. The goal was to better align adjusted EBITDA with operating cash flows.  For the three and nine months ended December 31, 2024 and 2025, we reported adjusted EBITDA of $20.5 million and $48.7 million, and $25.7 million and $70.6 million, respectively. During the same periods, we also invoiced recoveries of $2.0 million and $2.0 million, and $1.2 million and $4.0 million, respectively, which are included in cash flows from operating activities in the condensed consolidated statement of cash flows. Our use of adjusted EBITDA has limitations as analytical tools and should not be considered as performance measures in isolation from, or as a substitute for, analysis of our results as reported under GAAP. Some of these limitations are: • although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements; • adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs; • adjusted EBITDA does not consider the potentially dilutive impact of equity-based compensation; • adjusted EBITDA does not reflect tax payments that may represent a reduction in cash available to us; • other companies, including companies in our industry, may calculate adjusted EBITDA differently, which reduces its usefulness as a comparative measure; and • certain of the adjustments (such as restructuring-related expenses and integration-related expenses) made in calculating adjusted EBITDA are those that management believes are not representative of our underlying operations and, therefore, are subjective in nature. Restructuring-related expenses include inventory write-downs. retention, leadership transaction, and other professional costs associated with the restructuring activities. Because of these limitations, adjusted EBITDA should be considered alongside other financial performance measures, including profit (loss) from operations, net loss attributable to common stockholders and our other results. 42 Liquidity and Capital Resources Overview On April 2, 2024, we completed the MiX Combination, pursuant to which MiX Telematics became our indirect, wholly owned subsidiary. Concurrently with the closing, we redeemed all outstanding shares of our Series A Preferred Stock for approximately $90.3 million using proceeds from the RMB Facilities and incremental borrowing capacity available under our refinanced Hapoalim credit facilities. Since the closing of the MiX Combination, we have continued to optimize our capital structure through the refinancing of existing debt facilities, including the A&R Credit Agreement and RMB Facilities Agreements. These transactions have enhanced our liquidity and extended our debt maturities, while increasing our available revolving borrowing capacity to support working capital and growth initiatives. Debt Facilities Hapoalim Debt On March 18, 2024, our wholly owned subsidiaries Powerfleet Israel and Pointer entered into the A&R Credit Agreement with Hapoalim, which refinanced the prior facilities under, and amended and restated, the Prior Credit Agreement. The A&R Credit Agreement provides an aggregate borrowing capacity of approximately $50 million, consisting of two NIS-denominated term loans totaling $30 million (Hapoalim Facility A and Hapoalim Facility B) and two revolving credit facilities totaling $20 million (Hapoalim Facility C and Hapoalim Facility D). Powerfleet Israel drew $30 million in March 2024, using a portion to repay approximately $11.2 million under the prior term loans under the Prior Credit Agreement and distributing the remainder to us. In December 2024, the Borrowers entered into an amendment to the A&R Credit Agreement, increasing the principal amount available under Hapoalim Facility D from $10 million to $20 million, available through December 31, 2025, which was subsequently extended to June 30, 2026. As of December 31, 2025, Powerfleet Israel had utilized approximately $18.8 million under the Hapoalim Revolving Facilities. Borrowings are secured by first ranking and exclusive fixed and floating charges, including over the entire share capital of Pointer and over the assets of Pointer and excluding the Borrowers’ holdings in specified foreign subsidiaries. Interest rates for borrowings under Hapoalim Facility A and Hapoalim Facility B are Hapoalim’s prime rate + 2.2% per annum and Hapoalim’s prime rate + 2.3% (Hapoalim’s prime rate was 6% at December 31, 2025), respectively. The Hapoalim Term Facilities will mature on March 18, 2029, with Hapoalim Facility A amortizing quarterly and Hapoalim Facility B due at maturity. Interest rates for borrowings under Hapoalim Facility C is, with respect to NIS-denominated loans, Hapoalim’s prime rate + 2.5% and, with respect to U.S. dollar-denominated loans, SOFR + 2.15%. Borrowings under Hapoalim Facility D bear interest at the applicable interest rate set forth in the standard form documents entered into in connection with each utilization of Hapoalim Facility D. In addition, Pointer is required to pay a credit allocation fee in NIS, in each case, equal to 0.5% per annum on undrawn and uncancelled amounts of the Hapoalim Revolving Facilities during the period commencing on March 18, 2024 and ending on the last day of the applicable availability period of the Hapoalim Revolving Facilities. The Hapoalim Revolving Facilities are available for successive one-month periods until and including February 27, 2026, unless the Borrowers deliver prior notice to Hapoalim of their request not to renew the Hapoalim Revolving Facilities. RMB Debt On March 7, 2024, we entered into the Facilities Agreement with RMB, pursuant to which RMB agreed to provided us with the RMB Facilities totaling $85 million, composed of RMB Facility A and RMB Facility B, each having a principal amount of $42.5 million. We drew $85 million in March 2024, which primarily funded our Series A Preferred Stock redemption. On October 31, 2025, we and RMB agreed to amend and restate the Facilities Agreement. Pursuant to the Amended and Restated Facilities Agreement, interest is payable quarterly, at a fixed annual rate of 8.699% until March 31, 2027 and, thereafter, 4.85% per annum plus the applicable term SOFR reference rate, with respect to RMB Facility A, and a fixed annual rate of 8.979%, with respect to RMB Facility B, with principal repayments for RMB Facility A and RMB Facility B due March 31, 2028 and March 31, 2029, respectively. 43 MiX Telematics also maintains the RMB General Facility, repayable on demand, with a 365-day term and an interest rate linked to the South African prime rate minus 0.75% per annum. Repayment of the RMB General Facility, including capitalized interest, is due by the earlier of (a) the Available Date (as defined therein) or (b) April 2, 2026, unless extended by agreement between MiX Telematics and RMB. As of December 31, 2025, $21.4 million of the RMB General Facility was utilized. On September 27, 2024, we entered into the Facility Agreement with RMB, pursuant to which RMB agreed to provide us with the New RMB Term Facility totaling $125 million. We drew $125 million on October 1, 2024 to fund a portion of the purchase price for the FC Acquisition. Interest is payable quarterly at an interest rate of 5% per annum plus the applicable term SOFR reference rate and matures on October 31, 2029. On February 5, 2026, we entered into the New Facilities Agreement with RMB, pursuant to which RMB agreed to provide us and MiX Telematics with the New RMB Facilities, composed of New RMB Facility A in the aggregate principal amount of $10 million and New RMB Facility B in the aggregate principal amount of 180,000,000. New RMB Facility A bears interest at 2.50% per annum (provided no event of default is continuing), plus the three-month SOFR reference rate (or, if unavailable, an interpolated, historic or interpolated historic SOFR rate, or, if none of the foregoing are available, the three-month Treasury bill rate). New RMB Facility B bears interest at 1.95% per annum (provided no event of default is continuing), plus the South African rand overnight index average. Interest is payable quarterly in arrears. The New RMB Facilities will mature one year from closing. Liquidity Position As of December 31, 2025, we had cash and cash equivalents (including restricted cash) of $35.9 million and working capital of $15.1 million, compared to cash and cash equivalents (including restricted cash) of $48.8 million and working capital of $18.1 million as of March 31, 2025. As of December 31, 2025, Pointer had utilized $18.8 million under the Hapoalim Revolving Facilities. The available undrawn facility balance at December 31, 2025 was $11.2 million. As of December 31, 2025, $21.4 million of the RMB General Facility was utilized. We continue to monitor the effects of inflation, foreign currency volatility, and regional geopolitical instability, including the ongoing conflicts in the Middle East, on our supply chain and operating cash flows. There remains uncertainty surrounding the potential impact of such events on our results of operations and cash flows. Management is proactively managing liquidity through reductions in discretionary operating expenses and capital expenditures and increased utilization of available credit facilities to preserve cash. Capital Requirements and Outlook Our primary sources of liquidity are cash generated from operations, existing cash balances, and available borrowing capacity under our revolving facilities. Although we expect the MiX Combination and FC Acquisition to generate incremental cash flow benefits through operational synergies, we have not yet generated sufficient cash flow solely from operations to fund all our capital and financing needs. Our future capital requirements will depend on several factors, including, but not limited to: • the timing and success of new product launches; • revenue growth and margin trends; • integration costs and realized synergies from recent business combinations and acquisitions; • the pace of discretionary spending and capital investments; and • potential strategic acquisitions. We believe that our current cash balances, expected cash flows from operations, and borrowing capacity under our existing credit facilities will be sufficient to meet our operating, debt service, and capital expenditure requirements for at least the next 12 months. We may, however, seek additional financing or capital market transactions to support long-term strategic initiatives or refinance existing debt. 44 Operating Activities During the nine months ended December 31, 2025, net cash provided by operating activities was $20.5 million, compared to net cash used in operating activities of $16.9 million for the same period in 2024. The net cash provided by operating activities for the nine months ended December 31, 2025 primarily included $47.7 million for depreciation and amortization expense, $6.5 million for bad debts expense, $5.9 million of non-cash charges for stock-based compensation, $1.8 million for inventory reserve adjustments, $2.9 million for ROU asset amortization and $0.5 million for other non-cash items, partially offset by $3.7 million for deferred income taxes and $2.1 million for derivative mark-to-market adjustment. Changes in operating assets and liabilities included: • an increase in accounts receivables of $15.7 million; • an increase in deferred costs of $6.6 million; • an increase in inventory, net of reserve of $5.2 million; • a decrease in prepaid expenses and other assets of $1.1 million; • a decrease in lease liabilities of $2.9 million; and • a decrease in accrued severance payable of $1.3 million; partially offset by • an increase in accounts payable of $11.0 million; and • an increase in deferred revenue of $0.6 million. Cash flows from operating activities for the three and nine months ended December 31, 2025 include approximately $1.2 million and $4.0 million, respectively ($2.0 million and $2.0 million for the three and nine months ended December 31, 2024, respectively), which represent recoveries, through customer billings, of the contract asset recognized at acquisition for hardware delivered by Fleet Complete prior to October 1, 2024. Under ASC 606, such hardware was identified as a separate performance obligation satisfied at the point of delivery, resulting in the recognition of a contract asset at the acquisition date for hardware delivered prior to the acquisition. This contract asset is being recovered post-acquisition through customer billings. Investing Activities Net cash used in investing activities for the nine months ended December 31, 2025 was $31.9 million, compared to net cash used in investing activities of $160.5 million for the same period in 2024. The net cash used by investing activities was primarily due to $17.7 million for the purchase of fixed assets and $14.1 million for capitalized software development costs. The net cash used in investing activities of $160.5 million in the same period in 2024 was primarily due to $137.1 million in net cash assumed from the MiX Combination and FC Acquisition, $16.6 million for the purchase of fixed assets and $7.3 million for capitalized software development costs. Financing Activities During the nine months ended December 31, 2025, net cash used in financing activities was $2.0 million, compared to $107.6 million net cash provided by financing activities for the same period in 2024. The cash used in financing activities was primarily due to the repayment of long-term debt of $4.1 million, partially offset by the cash proceeds from the increase in short-term bank debt of $2.1 million. The net cash provided by financing activities during the nine months ended December 31, 2024 was primarily due to proceeds from long-term debt of $125.0 million, less $1.4 million of related debt costs, $66.5 million of net proceeds from our private placement in connection with the FC Acquisition, $11.9 million of proceeds from short-term bank debt, and $0.9 million of proceeds from the exercise of stock options, partially offset by the repayment of $90.3 million of Series A Preferred Stock following the MiX Combination, the purchase of $2.8 million of treasury stock upon vesting of restricted stock, and the repayment of $2.1 million of long-term debt. Off-Balance Sheet Arrangements We do not have any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources. 45 Impact of Recently Issued Accounting Pronouncements The Company is subject to recently issued accounting standards, accounting guidance and disclosure requirements. For a description of these new accounting standards, see Note 23 to our consolidated financial statements contained in Item 1 of Part I of this Quarterly Report on Form 10-Q, which is incorporated herein by reference. 46